Abstract Pathogenic infections cause thymic atrophy, perturb thymic-T cell development and alter immunological response. Previous studies reported dysregulated T cell function and lymphopenia in coronavirus disease-19 (COVID-19) patients. However, immune-pathological changes, in the thymus, post severe acute respiratory syndrome coronavirus-2 (SARS-CoV-2) infection have not been elucidated. Here, we report SARS-CoV-2 infects thymocytes, depletes CD4+CD8+ (double positive; DP) T cell population associated with an increased apoptosis of thymocytes, which leads to severe thymic atrophy in K18-hACE2-Tg mice. CD44+CD25-T cells were found to be enriched in infected thymus, indicating an early arrest in the T cell developmental pathway. Further, Interferon gamma (IFN-γ) was crucial for thymic atrophy, as anti-IFN-γ antibody neutralization rescued the loss of thymic involution. Therapeutic use of remdesivir (prototype anti-viral drug) was also able to rescue thymic atrophy. While Omicron variant of SARS-CoV2 caused marginal thymic atrophy, delta variant of SARS-CoV-2 exhibited most profound thymic atrophy characterized by severely depleted DP T cells. Recently characterized broadly SARS-CoV-2 neutralizing monoclonal antibody P4A2 was able to rescue thymic atrophy and restore thymic developmental pathway of T cells. Together, we provide the first report of SARS-CoV-2 associated thymic atrophy resulting from impaired T cell developmental pathway and also explains dysregulated T cell function in COVID-19.